Marig old Enterprises is authorized to issue 1,000,000 shares of $6 par value common stock. Since incorporation,

Question:

Marig old Enterprises is authorized to issue 1,000,000 shares of $6 common stock. Since incorporation, 550,000 shares have been issued. Currently, Marigold holds 40,000 of its own shares in treasury and has $3,500,000 in Retained Earnings. Marigold is considering the following three options:
(1) Declaring a 2:1 stock split
(2) Declaring a 15 percent stock (current market price is $15 per share)
(3) Declaring a 1:2 stock split
Required:
(a) What is the current balance in the account?
(b) How many shares of are currently outstanding?
(c) For each of the three options Marigold is considering, determine the number of shares authorized, issued, outstanding, and in treasury after the declaration. Each option should be executed on the original information.
(d) What would be the balance in Retained Earnings if the (a) split and (b) were chosen?
(e) Determine the per share and the balance in the account under each of the options.
(f) What would you expect to happen to the market price per share of Marigold if each of the three options were chosen? Explain the rationale for your answer.
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...